What South Africa can expect in 2013

2013 could be economically challenging for South Africa. We can expect wage negotiations to be very rough.

Time flies
2013 has arrived and we’re still here. The world did not end as predicted in December 2012, which is a great lesson in why one shouldn’t make predictions, especially predictions 1000 years into the future. What we can do, however, is analyse our environment and consider some of the events that could have a significant impact on our country in the next year. In fact, it is prudent to do so in order to inform any future planning.

2013 could be a challenging year economically for South Africa, with the ratings agencies S&P and Moody’s both having downgraded the country’s ratings and the IMF cutting back its growth forecast for the country. A major source of investor fear and uncertainty is the labour relations environment, which is unlikely to improve this year. The violent protests and strikes that took place in 2012 at mines around the country and on farms in the Western Cape have upped the ante significantly, but more importantly they have sent the message that violent protest gets results. Lonmin’s caving in to demands for a 22% wage increase after the deaths at Marikana set a dangerous precedent. We can expect this year’s negotiation season to be a rough one indeed.

Political power plays

The bruising Mangaung conference is now over, with clear winners and losers in the ANC’s leadership battles. Apart from the election of Cyril Ramaphosa as the party’s new Deputy President, several long-standing ANC leaders have either not been elected to the NEC or have chosen not to stand for it. We can expect some form of cabinet reshuffle before the opening of Parliament in February in order to accommodate the ANC’s leadership changes. The President has shown a willingness to reshuffle his cabinet before, and it will most likely be his last chance to do so before the general elections in April 2014.

We can expect the eight opposition parties that tabled the motion of no-confidence in President Zuma in 2012 to start the year preparing for a harsh debate. Helen Zille’s push to create a unified opposition to the ANC ahead of the 2014 elections will continue to be a major part of the DA’s plans, but there isn’t much to suggest that it will be successful this year. She will also have her hands full in the Western Cape, the only province not run by the ANC, where Marius Fransman has promised to pile on the pressure to win it back from the DA. We can expect plenty of dirty tricks, but he is very unlikely to succeed in his quest.

One of the emotive subjects sure to be invoked in anticipation of the 2014 elections is the upcoming 20 years of freedom and democracy. It is quite possible that Nelson Mandela, who is now 94 years old and who recently spent a long spell in hospital, will pass away this year. His funeral will be a massive global spectacle, putting the eyes of the world on South Africa again.  Not necessarily in a positive way, though, considering that many people around the world still firmly believe that he is the only thing that holds us together as a nation.  Nevertheless, Madiba’s spirit will also be invoked in anticipation of 2014 and we can expect a surge in the erection of statues, naming of streets and other activities bordering on a personality cult. Ironically, this is probably exactly the opposite of what he would have wanted.

Interestingly, two of Madiba’s contemporaries, Margaret Thatcher and George Bush Sr. were both in hospital at the same time as him in December 2012. Could this signal the end of an era in 2013?

The road to prosperity

On the long-term planning front, the voting in of Cyril Ramaphosa as Deputy President of the ANC is good news. As a very successful businessman with significant struggle credentials and a long trade union history, he is well liked by most economic players. More importantly, he was the Deputy Chairman of the National Planning Commission, which put together the National Development Plan (NDP). Planning has been a contested space during Jacob Zuma’s presidency, with Ebrahim Patel pushing his New Economic Growth Path and Rob Davies driving the Industrial Policy Action Plan (IPAP). The ANC now appears to have nailed its colours to the mast, with the President stating in his New Year’s message that the NDP is the plan that will get South Africa to prosperity.

The census results that were released in 2012 showed that we have already travelled quite a way along the road to prosperity, with significant improvements in access to basic services for many poor South Africans. The country is also already quite highly urbanized for a developing nation, with around 40% of the population living in the 8 biggest cities. This could make managing development somewhat easier in 2013 and beyond, as cities generate economies of scale and more job opportunities than smaller settlements.

Dual development

To date South Africa’s development has largely benefitted two levels. The low income groups have benefitted from government subsidized housing, education, social grants and other services like the proposed national healthcare plan, while the high income groups have benefitted from economic growth. This is likely to continue to be the case in 2013, and companies that service either of these two ends will do well. Those companies that aren’t clear on whether they are catering to the luxury market or the mass market will continue to suffer.

One thing that is having an impact at all levels is access to broadband telecommunications, whether that is via a cell phone or a corporate network. According to the Internet Access in South Africa study conducted in 2012, the country has a 15.8% broadband penetration, which is still low but which has more than doubled in the past two years. This growth will continue in 2013 and the benefits that connectedness brings will include easier access to educational materials, new business opportunities and more. Although we have traditionally been quite far behind on the technology front, South Africa will continue to become like most other middle-income nations.

Technology rules

We may see a growing interest in science and technology amongst young South Africans during 2013, as the first project related to the Square Kilometer Array (SKA) telescope begins. Phase One of this multinational project, whose core will be near Carnarvon in the Northern Cape, has essentially begun, with construction underway on the MeerKAT 64-dish array. When the SKA is completed in 2024, it will consist of thousands of dishes and antennae.

The Northern Cape will also host Britain’s Andy Green in his attempt to beat the world land speed record by driving at over 1600 km/h on the Haksteen Pan. More than 25 renewable energy projects will begin construction around the country this year, the first round of the renewable energy independent power producer (REIPP) procurement process having reached closure in November. And the debate about fracking in the Karoo will continue as loudly as ever, as the moratorium against exploration was lifted last year and Shell is able to push ahead with its plans. Hopefully the education authorities will take advantage of all of this technological activity in 2013 and use it to enthuse youngsters around the country about the importance of studying mathematics and science.

The African growth story

The IMF expects Sub-Saharan Africa’s economy to grow by 5.7% in 2013, up from a projected 5% in 2012. Within this group of countries there are some clear growth stars, like Ghana, Nigeria, Zambia, Ethiopia and Angola. It is expected that, between 2011 and 2015, 7 of the 10 fastest growing economies in the world will be in Sub-Saharan Africa. There are one or two potential political challenges coming up this year, such as the court challenge being launched by the losing presidential candidate in Ghana and the first general elections in Kenya since the one that ended in considerable violence in 2007-08. These are unlikely to derail Africa’s growth story, however, and South African companies that aren’t already operating across the continent would do well to start now.

An increasing proportion of South Africa’s own economic growth is going to be linked to the growth of the rest of Africa and the BRICs (whose leaders will be meeting in South Africa in March) over the coming decade. We need to wean ourselves off depending on austerity-stricken Europe and the United States for such a large share of our trade.

China will, of course, continue to play a very big role across Africa, investing in large infrastructure projects such as power and railways, amongst many other things. This will be both good and bad. It will be good for economic activity within Africa, enabling Africans to do business with each other more easily. It will be bad for rhinoceroses, elephants and abalone, all of which are as much in demand amongst the increasingly wealthy Chinese as ever. They will continue to be poached across the continent and shipped across the ocean until there are none left, unless something serious is done at diplomatic levels during 2013 and beyond.

Globally speaking

Further afield, China is becoming increasingly bold in its international dealings. This was evident in the stand off that took place with Japan over a set of small islands in the South China Sea, with both nations claiming them as their own. A time of prolonged global economic malaise is often a very dangerous time for world peace, as was abundantly clear in the late 1930s. It is quite possible that the next major multinational conflict will take place in the East within the next decade, with both China and Japan being involved.

Neither side can expect much support from the United States in 2013. Barrack Obama is the first President since Franklin Roosevelt in 1936 to win a second term with such a high unemployment rate. Obama no longer needs to win an election and can set to work on cementing his legacy, which is likely to be characterized by austerity and hard choices, such as increased taxes and spending cuts. As such, the United States is likely to join Europe in 2013 in focusing on economic issues closer to home in an attempt to get the nation working without resorting to printing money.

And finally

And finally, back home and on a happy note, South African sport is doing well and 2013 should provide us with plenty of reasons to celebrate and instill national pride. In January we host the African Cup of Nations football tournament. The Proteas are on top of the cricket world under a coaching team that includes World Cup winners Gary Kirsten and Paddy Upton, with many young superstars getting into their stride and promising great things for the future. And in rugby, the Springboks ended their end-of-year tour unbeaten, which promises a good 2013 as we head into the second year with coach Heyneke Meyer. Here’s to a more successful Tri-nations tournament than in 2012.

All in all, it’s likely to be a mixed bag in 2013, which, if we look back on any year, it always is. The best way to make sure we come out on top at the end of 2013 is to plan for as many ups and downs as possible, developing alternative strategies for each eventuality